The backlash against the banking sector continues, but Gordon Brown's speech to the G20 provided some hope that bold and necessary reforms might actually get on to the international agenda. The prime minister highlighted proposals for reform that have been on the edge of international debate. He was right to do so because stronger regulation will not be enough to restore trust in the financial system. As he argued, there "must be a better economic and social contract between financial institutions and the public based on trust and a just distribution of risks and rewards". However, one more reform proposal needs to join the others at the centre of the debate.

We had to save the banking sector, and with it our savings and ability to buy and sell, by pumping liquidity and new money into the financial system. But with a return to profitability, on current trading if not on the toxic assets that caused all the trouble, come signs that banks are going back to business as usual. We are seeing a return to the old ways in sector lobbying and a distinct lack of contrition. Hector Sants, the chief executive of the Financial Services Authority, noted in a speech that "there remains, I believe, an absence of collective responsibility for what has happened. I personally remain unconvinced that all senior management have taken on board the need to change and supervise." Sants also recognised that "there are limits to what regulatory rules can achieve".

Brown noted in his speech that international agreement on regulatory reform and better capital requirements for banks were needed. He argued too for agreement on "living wills" that outline how banks can be dealt with when they fail. He called for four further reforms to be considered, "an insurance fee to reflect systemic risk, or a resolution fund, or contingent capital arrangements, or a global transactions levy".

The debate has moved a long way. It was not long ago that an insurance premium for banks, for which I have argued, was nowhere near the agenda. Now it is being considered by the IMF. A transactions levy – a form of Tobin tax – is another reform that, once rejected out of hand, is now gaining acceptance, even if not by every government so far. Brown was clear that any proposal had to be global in nature, not distort markets or encourage avoidance, complement action already being taken and be fair and measured.

I believe the proposals Brown highlighted should be given serious consideration and I have some sympathy with Larry Elliott's support for a Tobin tax. However, these four reforms are all designed to mitigate the impact of the next financial crisis rather than prevent it happening in the first place. This is true even in the case of a transactions levy; one of the arguments for it is that it will not distort markets much even if it does reduce the volume of transactions. The main argument, which Elliott makes, is that it will generate tax revenue to pay down deficits already caused by financial crisis, and fund development in those countries most affected by global recession (and by climate change). I support a bank insurance premium because banks seem every few years to find new ways to lose money and threaten the whole system. Some upfront contribution to the taxpayer seems sensible in current circumstances.

If we are to restore the economic and social contract between banking and society we need to do more. Sants focused in his speech on finding ways to encourage the right industry culture that ensures ethical frameworks are applied by banks. This is worth pursuing but we need institutional reform to protect the financial system on which we depend. Banks will go bust from time to time. We should separate the more risky banking activities from retail banking. If the riskier banks go under, their shareholders will lose out but the system will not go down with them. This is the reform argued for by a variety of people, from Mervyn King, the Bank of England governor, to Labour's own Christian Socialist Movement.

There are objections and difficulties of course. Such reform would have to be global in nature, not distort markets, complement existing action and be fair and measured. It should therefore be added to the proposals being considered by the IMF. I suspect that, having been rejected out of hand, it will come to be seen as an essential reform.